Tag Archives: Wichita city government

Wichita Business Journal grants city council excess power

The Wichita Business Journal and the City of Wichita team to provide incorrect coverage and missing analysis.

Today the Wichita Business Journal reported: “An $11.5 million expansion of the Wichita operations of BG Products has been given the go-ahead. The Wichita City Council on Tuesday approved the expansion plan and issued industrial revenue bonds for the project.” 1

The problem with this reporting is that BG Products was not asking for the city’s permission to expand its operations, as the first sentence implies. Nor did the council approve an expansion plan, as the second sentence plainly states.

Instead, today the council granted BG Products an exemption from paying property taxes estimated at $204,280 per year for the next five years, and possibly another five years. This is how the industrial revenue bond program works in Kansas. Cities do not lend money. Instead, they grant exemptions from paying taxes. 2

(BG has agreed to pay $5,143 per year, the present taxes on a building being razed.)

While the agenda packet for the meeting specified BG’s plans for the bond proceeds, the proposed uses of the funds have little — nothing, really — to do with qualifying for IRBs. 3

So it’s curious as to why the agenda packet details the company’s plans for the bond proceeds. It’s even more curious why city economic development analyst Tim Goodpasture spent quite a bit of time briefing council members on these plans. Except: His Twitter handle is @goodybagict.

While the agenda packet supplies the estimated amount of property tax exemption granted to BG products, the city’s analysis makes no mention of the amount of sales tax BG may escape paying. Sales tax exemptions are another feature of IRBs in addition to property tax exemptions. While the city’s analysis doesn’t mention sales tax, section 5 of the ordinance passed by the council states the city has determined BG is entitled to a sales tax exemption of unspecified amount.

Since the city’s analysis of the proposal did not include mention of sales tax, we’re left to wonder whether the Wichita State University Center for Economic Development and Business Research incorporated the sales tax exemption in the analysis it performs for the city.


Notes

  1. Heck, Josh. Council green-lights company’s $11.5M expansion. Wichita Business Journal, September 12, 2017. Available at https://www.bizjournals.com/wichita/news/2017/09/12/council-green-lights-companys-11-5m-expansion.html.
  2. Weeks, Bob. Industrial revenue bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/industrial-revenue-bonds-kansas/.
  3. “The percentage of taxes abated is based on capital investment and job creation. Majority of goods or services sold must be destined for customers outside of the Wichita Metropolitan Statistical Area (MSA). Company must pay average wages equal to or greater than the industry or Wichita MSA wage rate. City benefit/cost ration must be at least 1.3 to 1.” City of Wichita, Economic Development Incentives. Available at http://www.wichita.gov/Economic/Pages/Incentives.aspx.

WichitaLiberty.TV: Wichita and Kansas economies

In this episode of WichitaLiberty.TV: Bob Weeks and Karl Peterjohn discuss issues regarding the Wichita and Kansas economies. View below, or click here to view at YouTube. Episode 163, broadcast September 3, 2017.

Shownotes

  • Wichita employment trends. While the unemployment rate in the Wichita metropolitan area has been declining, the numbers behind the decline are not encouraging.
  • Downtown Wichita business trends. There has been much investment in Downtown Wichita, both public and private. What has been the trend in business activity during this time?
  • Wichita downtown plan focused on elite values, incorrect assumptions. One of the themes of those planning the future of downtown Wichita is that the suburban areas of Wichita are bad. The people living there are not cultured and sophisticated, the planners say. Suburbanites live wasteful lifestyles. Planners say they use too much energy, emit too much carbon, and gobble up too much land, all for things they’ve been duped into believing they want.
  • Charts shown in the show: (Click charts for larger versions.)

In Wichita, not your tax dollars

At a Wichita City Council meeting, citizens are told, “These tax dollars are not your tax dollars.”

At the meeting of the Wichita City Council this week, Wichita City Council Member Lavonta Williams (district 1, northeast Wichita) lectured the audience, saying: “These tax dollars are not your tax dollars.”

The matter under consideration was a redevelopment plan for Naftzger Park in downtown Wichita. Approval was necessary if tax increment financing (TIF) funds could be spent on the park. 1 TIF is a mechanism whereby future tax revenues are redirected towards a specific purpose, usually to the benefit of a private property owner. 2

The “plan” under consideration was solely the financing plan. No actual design for a future Naftzger Park was considered or selected.

At the council meeting — and at many other meetings and online discussions — people have noted that the city is planning to spend money on the redesign of Naftzger Park while at the same time there are, according to them, unmet needs throughout the city: Closing swimming pools, assistance for homeless, inadequate staffing of the police department, etc. Why, they ask, can’t the Naftzger Park money be used to solve these problems?

The admonishment of Williams — “These tax dollars are not your tax dollars” — was directed at this criticism. She is correct: The mechanism of TIF allows for these dollars to be spent on just one thing, and that is the redesign of Naftzger Park. 3

So in one way, they aren’t our tax dollars. They are being spent in the way that TGC Development Group, the owner of adjacent property, wants them spent. 4

But this upends the rationale and justification for taxation.

In Wichita, as in most cities, the largest consumers of property tax dollars are the city, county, and school district. All justify their tax collections by citing the services they provide: Law enforcement, fire protection, education, etc. It is for providing these services that we pay local taxes.

Within a TIF district, however, the new property tax dollars — the increment — do not go to the city, county, and school district to pay for services. Instead, these dollars are used in ways that benefit private parties.

Yet, the new development will undoubtedly demand and consume the services local government provides — law enforcement, fire protection, and education. But its incremental property taxes do not pay for these, as they have been diverted elsewhere. (The base property taxes still go to pay for these services, but the base is usually low.) Instead, others must pay the cost of providing services to the TIF development, or accept reduced levels of service as existing service providers are saddled with increasing demand.

Supporters of TIF argue that TIF developers aren’t getting a free ride. The city isn’t giving them cash, they say. The owners of the TIF development will be paying their full share of higher property taxes in the future. All this is true. But, these future tax dollars are spent for their benefit, not to pay for the cost of government.

In the case of Naftzger Park, the situation is murkier. Usually TIF funds are spent on things that directly benefit the private development, things like property acquisition, site preparation, utilities, and drainage. In this case, the TIF funds are being spent to redesign a public park — and a park that many people like.

But it’s clear that the present state of Naftzger Park is a problem for TGC. A newly redesigned park will effectively serve as the “front yard” for TGC’s projects, and will greatly benefit that company. Now that the park redesign will be financed with TIF, this new park comes at no cost to TGC.

Contrary to Council Member Williams and the others who voted in favor of the TIF redevelopment plan: These are our tax dollars. Redirecting them for private benefit has a cost. A real cost that others must pay. If we don’t recognize that, then we must reconsider the foundation of local tax policy.


Notes

  1. Weeks, Bob. Naftzger Park tax increment financing (TIF). Available at https://wichitaliberty.org/wichita-government/naftzger-park-tax-increment-financing-tif/.
  2. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.
  3. The Center City South TIF district is an unusual case in that only 70 percent of the incremental taxes are redirected.
  4. Weeks, Bob. Naftzger Park contract: Who is in control? Available at https://wichitaliberty.org/wichita-government/naftzger-park-wichita-contract-who-controls/.

Redesigned Naftzger Park likely not only subsidy

The developers of property near Naftzger Park in downtown Wichita will possibly receive millions in other subsidy.

The powerful impetus to redevelop Naftzger Park in downtown Wichita is attributed to two sources: The NCAA basketball games in March and the desire of TGC Development Group to develop property it owns near the park.

How much motivation comes from which source depends on who you ask. But it’s clear that the present state of the park is a problem for TGC. A newly redesigned park will effectively serve as the “front yard” for TGC’s projects, and will greatly benefit that company. If the park redesign is paid for with tax increment financing, or TIF, this new park comes at no cost to TGC.

But this is likely not the only benefit TGC will receive from taxpayers. The building TGC owns near Naftzger Park is commonly known as the “Spaghetti Works” building. Before that it was known as the Wichita Wholesale Grocery Company. Under that name, the property was listed on the National Register of Historic Places in 1983. 1 Then, in 2016 conditional approval was given for federal historic preservation tax credits. 2

These federal tax credits are worth 20 percent of the cost of rehabilitating historic structures. 3 These credits may be used dollar-for-dollar when paying federal income taxes, or they may be sold for cash, usually at a discount, and someone else uses them — instead of cash — to pay taxes they owe.

Wichita Wholesale Grocery Company faded sign. Click for larger.
So when TGC spends, say, $1,000,000 on the building, it will receive — conceptually — a slip of paper valued at $200,000. It may use this instead of cash to pay its taxes, or it may sell it to someone else.

That’s not all. Although there is no application at this time, it’s likely that TGC will also apply for Kansas tax credits. These are like the federal credits, except they are for 25 percent of the rehabilitation costs. 4

Together these tax credits can pay up to 45 percent of the costs of rehabbing this building.

These tax credits have a real cost. As long as state or federal government does not reduce spending by the amount of these credits, and specifically because of these credits, other taxpayers have to pay.

Additionally, these tax credits are inefficient. When Kansas Legislative Post Audit looked at Kansas tax credits, it found that when sold, the state receives 85 cents of project value for each dollar foregone. 5

There are many reasons why historic preservation tax credits should be eliminated. 6 7 But for now, it’s important to know that a redesigned Naftzger Park is not the only economic subsidy the nearby private property owners are likely to receive.


Notes

  1. National Park Service, National Register Digital Assets. Available at https://npgallery.nps.gov/AssetDetail/NRIS/83000440.
  2. Wichita Wholesale Grocery Company search at National Park Service, Technical Preservation Services. Captured August 14, 2017. Available at https://drive.google.com/file/d/0B97azj3TSm9MN292dHVZZ2NLcWs/.
  3. National Park Service, Technical Preservation Services. Tax Incentives for Preserving Historic Properties. Available at https://www.nps.gov/tps/tax-incentives.htm.
  4. Kansas Historical Society. State Historic Rehabilitation Tax Credit. available at http://www.kshs.org/p/state-historic-rehabilitation-tax-credit/14666.
  5. “The Historic Preservation Tax Credit isn’t cost-effective. That credit works differently than the other three because the amount of money a historic preservation project receives from the credit is dependent upon the amount of money it’s sold for. Our review showed that, on average, when Historic Preservation Credits were transferred to generate money for a project, they only generated 85 cents for the project for every dollar of potential tax revenue the State gave up.” Kansas Legislative Post Audit. Kansas Tax Revenues, Part I: Reviewing Tax Credits. Available at http://www.kslpa.org/assets/files/reports/10pa03-1a.pdf.
  6. Weeks, Bob. Kansas historic preservation tax credits should be eliminated. Available at https://wichitaliberty.org/kansas-government/kansas-historic-preservation-tax-credits-should-be-eliminated/.
  7. Weeks, Bob. Kansas historic preservation tax credits should not be expanded. https://wichitaliberty.org/kansas-government/kansas-historic-preservation-tax-credits-should-not-be-expanded/.

Naftzger Park land ownership

One of the issues surrounding Naftzger Park in downtown Wichita is land ownership.

Naftzger Park land ownership from Sedgwick County Online Map Portal. Click for larger.
Information from the Sedgwick County Online Map Portal shows land parcels and ownership. The nearby illustration shows Naftzger Park and its environs. (I don’t think it’s possible for me to save a link that brings you directly to the map as I’ve shown it.) On this map, the two parcels owned by private owners are outlined in orange. The City of Wichita or the Board of Park Commissioners own the other parcels north of William Street.

We can see that the park is built partially on land owned by private owners. City officials have said that a narrow strip of land on the east side of the park is involved. From this map we can see that the situation is more complex.

It would be interesting to learn how this mistake — if that’s what it is — occurred. At one time the city owned the entire block after it acquired land to reform what was skid row.

Naftzger Park public hearing

On Tuesday August 15 the Wichita City Council will hold a public hearing to consider authorizing spending TIF funds on Naftzger Park.

This week the Wichita City Council is scheduled to hold a public hearing on a new redevelopment project plan for a tax increment financing (TIF) district in downtown Wichita. The redevelopment project plan contemplates transforming Naftzger Park. The hearing is part of the regular council meeting at 9:00 am Tuesday August 15 at city hall.

While the city has held four public meetings on the topic of Naftzger Park redesign, these meetings were not legally required. But the Tuesday public hearing is required, as city documents explain: “In order to establish the legal authority to use tax increment financing the City Council must adopt a redevelopment project plan for a project area, within the district, which provides more detailed information on the proposed project, how tax increment financing would be used and demonstrates how the projected increase in property tax revenue will amortize the costs financed with tax increment financing.” 1

As for providing “more detailed information on the proposed project,” the redevelopment project plan supplied by the city is quite generic. This week the project architect presented four plans at public meetings. But these drawings cannot be found online — not on the city’s website, its Facebook page, or the Wichita Downtown Development Corporation — except for unclear photographs.

The redevelopment project plan describes how to pay for the redesign of Naftzger Park: “Improvements on the adjacent site are anticipated to generate the revenue necessary to fund the improvements to Naftzger.” This is the mechanism of tax increment financing: Future property taxes are redirected from their normal course and funneled back to benefit the development. The city correctly notes that the TIF funds are being used to develop a public park, not a private development. But the private property owner obviously considers the present park a problem. A new park will effectively serve as the “front yard” for new development and will be of great benefit to the owner. And, many people are opposed to changing the park.

From the redevelopment project plan: “The City will provide public funding, including tax increment financing and general obligation bond financing to finance the project costs.” 2 That is, there is additional spending contemplated.

“Tax increment funds may also be used to pay for eligible improvements financed through general obligation bonds and to reimburse additional eligible project costs when additional tax increment revenues are available.” 3 Here, the redevelopment project plan hints at more property tax being redirected to the development.

“It is assumed that Project construction will begin in 2018 and be completed before the end of 2023, and therefore achieve full valuation by January 1, 2024. It is estimated that in 2024 the property tax increment will be $163,970.” 4 These projections are highly speculative. The city’s record in projecting future development in current TIF districts is spotty. See WaterWalk, Ken-Mar, etc.

“Park improvements are projected to costs approximately $3,000,000, with $1,500,000 of such costs to be financed from proceeds of the City’s full faith and credit tax increment bonds (the “Bonds”).” 5 Here the redevelopment project plan reminds readers that if future property taxes are insufficient to pay the bonds, the city itself is liable. The city exacts an agreement from TIF developers that if TIF revenue is insufficient that the developers will pay the difference, but the city’s record in enforcing these agreements is spotty. 6

“Incremental tax revenue available after the payment of such Bonds may be used to pay for additional TIF-eligible Project costs related to Park improvements on a pay-as-you-go basis or reimburse the debt service on City general obligation bonds issued to finance a portion of the cost of the Park improvements, if any.” 4 Again, the redevelopment project plan hints that future park spending may be paid for with TIF.

The table titled “Projected Tax Increment Report” is subtitled with the name of a different project. This is probably an error without much consequence, as someone in the city probably reused a spreadsheet from a similar project and forgot to revise the title. The same error appears in a second table of figures titled “Projected Bond Cash Flow Report.” Except: The city made this same error in previous versions of this document, as I reported earlier. 8 We’re left to wonder whether anyone — at city hall, the Wichita Downtown Development Corporation, or the private developers who will benefit from this spending — care to correct errors like this.

The first table projects the assessed value — and by implication, also the appraised or market value — of property through the year 2036. These projections are highly speculative.

Excerpt from city documents. Click for larger.

In a section titled “Description of Naftzger Park Project” we see an item titled “TIF Pay-as-you-go Costs” with the amount given as $1,500,000. This spending was mentioned in earlier city documents, but hasn’t received much public discussion. The $1.5 million figure that is in the news is from “regular” TIF financing. In that case, the city borrows money, and the debt is repaid from future property taxes. With the pay-as-you-go TIF, the city simply spends future property taxes in the project. 9 The difference is that in regular TIF, the city is liable for the debt if future incremental taxes are insufficient to cover bond payments. In pay-as-you-go TIF, there is no debt, only redirection of property taxes from their normal distribution.

For more about Naftzger Park, see these articles and other information from Voice for Liberty:


Notes

  1. Wichita City Council Agenda Packet for August 15, 2017. Item IV-2. Available at http://www.wichita.gov/Council/Agendas/08-15-2017%20City%20Council%20Agenda%20Packet.pdf.
  2. City of Wichita. Comprehensive Financing Feasibility Study for the Naftzger Park Project within the Center City South Redevelopment District City of Wichita, Kansas. Available in the August 15 agenda packet.
  3. Ibid.
  4. Ibid.
  5. Ibid.
  6. See, for example, Weeks, Bob. Ken-Mar TIF district, the bailouts. Available at https://wichitaliberty.org/wichita-government/ken-mar-tif-district-the-bailouts/. Also
  7. Ibid.
  8. Weeks, Bob. Naftzger Park public hearing to be considered. Available at https://wichitaliberty.org/wichita-government/naftzger-park-public-hearing-to-be-considered/.
  9. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.

WichitaLiberty.TV: Naftzger Park

In this episode of WichitaLiberty.TV: Wichita Assistant City Manager and Director of Development Scot Rigby joins hosts Bob Weeks and Karl Peterjohn to discuss the plans for Naftzger Park. Then, Bob and Karl continue the discussion. View below, or click here to view at YouTube. Episode 161, broadcast August 13, 2017.

Shownotes

Naftzger Park construction manager

The City of Wichita seeks a construction manager for the construction of Naftzger Park.

The request for qualification is titled “CONSTRUCTION MANAGER AT RISK to Construct Naftzger Park.” On the city’s purchasing website the relevant information is contained in five separate documents. I’ve gathered them together in one document, which you may access here.

The city may be getting ahead of itself. The RFQ sets the deadline for submissions as 2:00 pm Tuesday August 15. That morning is when the Wichita City Council will consider approval of the redevelopment project plan. 1 Until that plan is approved by a two-thirds majority of the council, there exists no authorization to spend funds from a tax increment financing district. 2

Trends of business activity in downtown Wichita. Click for larger.
Referring to the planning process for downtown Wichita in 2008 and 2009, the document says, “Since that time downtown Wichita has experienced record growth.” This statement isn’t true. Since that time there are fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. In all cases, the trend is lower. 3 There is growth in people living downtown.

Something new appears in this paragraph: “Design and construction are planned to be implemented in phasing to accommodate budget, with the first phase budget of $1,500,000 for design, project administration and construction. The first phase budget will provide for an open and usable park that accommodates as many programming features as budget allows. In addition to the $1,500,000 for phase one, there will also be approximately $500,000 worth of cross site work, demolition, and infrastructure to be completed on the adjacent property.”

The document doesn’t specify the source of the $500,000, and this is the first mention of that sum, as far as I know. But the fact that management of it is included in this RFQ is more evidence that the redesign of Naftzger Park is really a project being done for the benefit of the nearby private landowner.

Later, more evidence of the park’s importance to, and benefit of, one company: “Because of the adjacent location and utilization of the park as it relates to the Spaghetti Works Development, it is necessary that TGC’s team play an integrated role; so that the flow and function developed in the park work seamlessly together with the TGC project.”

Just to emphasize, the proposals are not sent to city hall but to the private company that will benefit from the park redesign: “Sealed Request for Proposal will be received in the office of the TGC Development Group, 125 N Emporia, Suite 202, Wichita, KS 67202, Attn: Blake Heiman.”

A possible plan for Naftzger Park from the City of Wichita
And who will make the decision? An addendum to the RPQ holds: “A Selection Committee consisting of staff from various City department and TGC will evaluate submissions.”

The city has provided an illustration of what a potential redesign might look like. There has been much criticism — including by city council members — especially for the covering of the park with artificial turf. But, the RFQ states: “A summary of programmatic elements will include a flexible use lawn area (with potential of artificial turf).”

For more about Naftzger Park, see these articles and other information from Voice for Liberty:


Notes

  1. Weeks, Bob. Upcoming Naftzger Park legislative action. Available at https://wichitaliberty.org/wichita-government/upcoming-naftzger-park-legislative-action/.
  2. Weeks, Bob. Background on tax increment financing (TIF) as applied to Naftzger Park in downtown Wichita. Available at https://wichitaliberty.org/wichita-government/naftzger-park-tax-increment-financing-tif/.
  3. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.

Naftzger Park contract: Who is in control?

The City of Wichita says it retains final approval on the redesign of Naftzger Park, but a contract says otherwise.

As part of the proposed redesign of Naftzger Park in downtown Wichita, an architectural firm has been engaged, and a contract agreed to. I’ve made the document available through Google Drive here.

In responding to my request for the contract, the city included this information:

The Naftzger Park design contract you requested is between SWA Balsley and TGC Development Group. SWA has provided a copy of the draft agreement. The City has coordinated with TGC in this effort to ensure that the selection process followed City procedures. The City Council has taken action to select SWA as the design team and did accept the design funding proposal of SWA Balsley, but is not a party to the design contract. The City is utilizing this collaborative approach to take advantage of the experience and expertise in project management of TGC Development in this unique project. Any final Naftzger Park design approval is retained by the Parks Board and the City of Wichita. 1 (emphasis added)]

As stated, and according to the language of the contract, the parties to the contract are SWA/Balsley Landscape Architects, P.C. (“SWA/Balsley”) and TGC Development Group, which is referred to as the “Client.” The City of Wichita is not the Client; that party is a private business firm. And not just any private firm, but one that owns property abutting Naftzger Park and is clearly looking to rebuild the park according to its needs and profitability, not what is good for the city at large.

As to the city’s contention that final approval is retained by it alone, the contract holds language like this:

“Upon the Client’s authorization to commence design development …”

“Upon the Client’s approval of the design development plans and preliminary cost estimate …”

“SWA/Balsley shall prepare and process change orders only with prior approval of the Client.”

Example from the contract. Click for larger.
(The document is covered with a large watermark that obscures parts of its text. As the document is encrypted, there is no way to remove the watermark without the password, as far as I know.)

Remember, the city is not the Client. TGC Development is the Client.

Here is a paragraph near the end of the contract:

“As material inducement to SWA/Balsley to enter into this agreement, Client represents it warrants that it has full authority to bind the City to the terms of this Agreement, and that the City will assume full responsibility for payment.” (emphasis added)

There’s a discrepancy here. The city says final approval rests with it alone, but TGC Development has agreed to a contract which states it can bind the city to an agreement.

By the way, if you thought the Naftzger Park redesign was a $1.5 million project, think again, as this language from the contract shows:

“Based upon our understanding of the project, the park design should encompass the vision as described in the RFQ and be planned with phased implementation. Conceptual and Schematic Design phases were based on a complete vision of an estimated $3,000,000 budget. Design Development, Construction Documentation, and Construction Observation, which are to be completed under Phase One, are established at $1,500,000. The fee quoted in this proposal is based upon this present understanding and these budgetary figures.”


Notes

  1. Correspondence from Lauragail Locke of the Wichita City Manager’s Office, August 3, 2017.

Downtown Wichita gathering spaces that don’t destroy a park

Wichita doesn’t need to ruin a park for economic development, as there are other areas that would work and need development.

One of the reasons for the redesign of Naftzger Park in downtown Wichita is to increase economic development. A city council agenda held, “These recommendations include opening up the park to provide for increased walking and public activity as well as to encourage development adjacent to the park.” 1

Other city documents say the redesign of the small downtown Wichita park is to, “create a continuous flex space for multi-use; i.e. Tai Chai, as well as other passive use activities including but not limited to weddings, concerts, performances, films, special celebrations and parties as well as quiet contemplation.” 2

In other documents city officials have promoted the need for gathering space before and after events at Intrust Bank Arena.

All this is fine. But current plans call for the destruction of an existing park and its transformation into this new design.

But there’s no need to destroy an existing park in order to meet the goals of the city. There is a lot of vacant and underutilized land immediately south and west of the arena. Any of this could be transformed to what the city wants. Development of these areas would possibly help fulfill the promise of the arena as a driver for economic development and growth.

Today, 12 years after the identification of the arena’s site and seven years after its opening, there is little activity around the arena to its west and south. Five years ago the Wichita Eagle noted the lack of growth in the area.

“Ten years ago, Elizabeth Stevenson looked out at the neighborhood where a downtown arena would soon be built and told an Eagle reporter that one day it could be the ‘Paris of the Midwest.’ What she and many others envisioned was a pedestrian and bike-friendly neighborhood of quaint shops, chic eateries and an active arts district, supported by tens of thousands of visitors who would be coming downtown for sporting events and concerts. It hasn’t exactly turned out that way. Today, five years after the opening of the Intrust Bank Arena, most of the immediate neighborhood looks much like it did in 2004 when Stevenson was interviewed in The Eagle. With the exception of a small artists’ colony along Commerce Street, it’s still the same mix of light industrial businesses interspersed with numerous boarded-up buildings and vacant lots, dotted with ‘for sale’ and ‘for lease’ signs.” 3

Since then, not much has changed. The area surrounding the arena is largely vacant. Except for Commerce Street, that is, and the businesses located there don’t want to pay their share of property taxes.4

On the other hand, the area around Naftzger Park is developing. The city points to Old Town as a success, and now promotes the “Douglas Corridor” as an area where city policies have produced growth, with more yet to come as Cargill and a call center move to a location near Naftzger Park.

But the areas on the other side of the arena are not growing. Doing something to jump-start development in that stagnant area could help downtown growth. Paying attention to that area would fulfill past promises and projections, and increase the credibility of Wichita’s leaders.

Nearby are photographs of the area surrounding the arena to the east and west. Click photos for larger versions.

Intrust Bank Arena and environs, with areas for development outlined and numbered. Image courtesy Google.
In area 1, across Emporia Street from the arena, a former used car lot is unused. A vacant lot is to its immediate west.
Area 3 is the block diagonally south and west from the arena. It is vacant land except for parking and a work-release facility.
More of area 3.
Area 4 is directly across Waterman Street to the south of the arena. It holds a parking lot along with abandoned and underutilized buildings.
Abandoned buildings on St. Francis Street, within pitching distance of the arena. Could this area be used for gatherings?

What was said

Following, a few quotes from civic leaders in 2005.

“On the brink of spending $55 million to renovate the Kansas Coliseum, the community saw the wisdom of investing that kind of money instead in downtown Wichita, where it could spur development, lure conventions and enhance Old Town and the planned WaterWalk development. The action on behalf of an arena has offered the strongest signal in years that Wichita, booming fringes and all, still wants a vibrant, functional downtown. 5

Imagine sports fans and concertgoers flocking to restaurants and shops in a lively, distinctive district surrounding Wichita’s new downtown entertainment arena. Can the 15,000-seat venue be the Pied Piper of economic development? City officials hope so.

“It will have a profound change,” Wichita Mayor Carlos Mayans said. He envisions a modern, sophisticated district, home to a four-star hotel, apartment buildings, high-end retailers, a Cajun restaurant – maybe a Hard Rock Cafe. “The things happening downtown are going to change downtown Wichita for the 21st century,” he said.

Officials view the arena as another opportunity to coax more life into downtown. The city is hunting for a consultant to help it cash in on development opportunities surrounding the arena. 6

While Sedgwick County lays the groundwork for its 15,000-seat downtown arena, the city of Wichita is busy trying to plan for everything that will go around it. The city wants the advice and expertise of a consultant to help it develop a lively, distinctive district to jump-start — and cash in on — downtown redevelopment. 7

The arena will cause spillover development, but the city must carefully set the conditions to foster economic development, said Dave Knopick, an urban planner with Gould Evans Associates, the consultants hired to study the arena area. This includes attractive streets and public features, adequate parking, good traffic flow, zoning to bring in wanted businesses, and even deals with developers to bring in new projects. “These are once-in-a-lifetime events that have a huge impact, so you have to make the right decision to maximize the benefits,” Knopick said. …

The arena is a key part of the downtown revival, but it’s just one piece. “It’s a redeveloping area, but those changes may take place over 10 or 15 years,” Knopick said. “It won’t all just happen because the arena was built.” 8

The most exciting development: a new downtown arena. Whatever the final site selection (we vote for the east site), the reality is sinking in that this major community project will have a heavyweight impact on the core area. The naysayers said none of this could happen — in fact, they said the same thing about Old Town. It’s happening.

Things change — and sometimes change is disruptive and hard to accept. But Wichitans should be excited by what’s happening downtown.

It’s experiencing a rebirth. 9

I would like to congratulate the city leaders and the public for their insight and willingness to see the impact that the development of downtown will have for the citizens of Wichita and all of south-central Kansas. We only stand to benefit from this much-needed injection into the economy.

It is about re-energizing this community, spurring economic development, creating jobs, quality of life, encouraging tourism from around the region, and bringing money into our community.

The WaterWalk development and the downtown arena are only the beginning of the potential for downtown to flourish and continue to fuel other economic development. Wichita has an opportunity to become a viable destination stop. And these projects can help support many of the other amenities already available in the city, such as the museums along the river, the ice center, Old Town and so many other businesses and attractions. 10 Richard L. Taylor of Wichita is business manager for the Building and Construction Trades Council of Central and Western Kansas.


Notes

  1. Wichita city council agenda packet, July 18, 2017. Item IV-3.
  2. Request for Qualifications No. — FP740043. Available at https://drive.google.com/file/d/0B97azj3TSm9MQ1ZVcXVsNVQ2dkE/view.
  3. Lefler, Dion. 5 years after Intrust Bank Arena opens, little surrounding development has followed. Wichita Eagle. December 20, 2014. Available at http://www.kansas.com/news/local/article4743402.html.
  4. Riedl, Matt. Has Commerce Street become too cool for its own good? Wichita Eagle. April 8, 2017. http://www.kansas.com/entertainment/ent-columns-blogs/keeper-of-the-plans/article143529404.html.
  5. Holman, Rhonda. AT LAST – ARENA COMING SOON TO DOWNTOWN WICHITA. Wichita Eagle, March 23, 2005.
  6. Buselt, Lori O’Toole. GROUNDS FOR CHANGE — WILL ARENA RENEW FALLOW DOWNTOWN? Wichita Eagle, May 1, 2005.
  7. Buselt, Lori O’Toole. CITY TRIES TO PLAN ARENA’S DISTRICT – — OFFICIALS ARE CONSIDERING HIRING A CONSULTANT TO HELP DEVELOP THE AREA AROUND THE NEW DOWNTOWN ARENA. Wichita Eagle, June 20, 2005.
  8. Voorhis, Dan. TUG-OF-WAR FOR ARENA — PLACEMENT WILL FAVOR OLD TOWN OR WATERWALK. Wichita Eagle, September 18, 2005.
  9. Scholfield, Randy. REBIRTH — DOWNTOWN IS PLACE TO BE. Wichita Eagle, November 7, 2005.
  10. Taylor, Richard L. DOWNTOWN DEVELOPMENT BENEFITS ALL. Wichita Eagle, November 15, 2005.

Naftzger Park concerts and parties?

In Wichita, a space for outdoor concerts may be created across the street from where amplified concerts are banned.

Amplified music is banned in Gallery Alley, but concerts and parties are proposed in Naftzger Park.
One of the City of Wichita’s stated purposes for the redesign of Naftzger Park in downtown Wichita is to, “create a continuous flex space for multi-use; i.e. Tai Chai, as well as other passive use activities including but not limited to weddings, concerts, performances, films, special celebrations and parties as well as quiet contemplation.” 1

There may be a problem, however. Directly across the street from Naftzger Park lies Gallery Alley. This is a new development whereby an alley was converted to a space for events, like concerts. Not long after the alley’s first events, the Wichita Eagle reported this:

But it was too much for the neighbors, according to Jason Gregory, executive vice president of Downtown Wichita.

“It’s just the amplified sound — we’re just trying to be respectful to those buildings there, that have a mix of uses,” Gregory said. “There’s residences there, and obviously when you get high-bass subwoofers, you’re basically hearing that through the building.” 2

Now, right across the street from Gallery Alley, directly across St. Francis from residences at the former Eaton Hotel, directly across Douglas from the Zelman Lofts, and catty-corner from the Lofts at St. Francis, the city proposes creating an outdoor space for — get ready: Concerts and parties.

By the way, the proposed use of the parking lot that abuts Naftzger Park is a “high-end mixed-use development” possibly including a hotel. I don’t know if this use is consistent with parties and concerts in its front yard.


Notes

  1. Request for Qualifications No. — FP740043. Available at https://drive.google.com/file/d/0B97azj3TSm9MQ1ZVcXVsNVQ2dkE/view.
  2. Riedl, Matt. Bummer, no more crowd-surfing in downtown Wichita alley. Wichita Eagle, June 20, 2017. Available at http://www.kansas.com/entertainment/ent-columns-blogs/keeper-of-the-plans/article157094874.html.

Wichita in the Wall Street Journal

A Wall Street Journal article reports on Wichita, but there are a few issues with quotes from the mayor.

In an article in one of the nation’s leading newspapers, Wichita Mayor Jeff Longwell is quoted:

“We’re no longer going to play in this traditional incentive game and offering cash to companies,” said Mayor Jeff Longwell. “We think quality of life will do more.”

The article as shared on Facebook. Click to visit the post.
The article in the Wall Street Journal is The ‘Air Capital of the World’ Has a Problem: Too Few Aviation Workers. A subscription may be required to view the article.

What is wrong with what the mayor said? It’s mostly true that the city is no longer paying cash as jobs incentives, although that was never a large part of the city’s spending on incentives. What’s troubling about the mayor’s remarks is that the city has many incentives programs that are just as valuable as paying cash. The State of Kansas adds others. Here are the major programs the city and state offer that are as good as cash:

The city offers programs (IRB and EDX) in which companies escape paying property taxes, which is just as good as receiving the same amount in cash. 1

The IRB program, once bonds are authorized by the city, often allows a company to escape paying sales taxes, in some cases several million dollars. Not paying a dollar in sales tax is just as good as receiving a dollar in cash. 2

The city uses tax increment financing (TIF), in which property taxes paid by a property owner are redirected for the property owner’s benefit. So instead of paying cash for improvements, developers let their property taxes pay for these. 3

The city uses STAR bonds, in which future sales tax revenue is redirected for the benefit of a specific property owner. This lets the property owners avoid spending cash on things. 4

The city approves the formation of community improvement districts in which the taxing authority of the city is used to allow merchants to collect extra sales tax. 5

For one company, the city cut permitting fees in half. It’s estimated the company will save $85,000. That’s as good as receiving cash. 6

And if this is not enough, the city might pay your company $6,500,000 in cash to use your parking garage during the hours you don’t need it. (Never mind this parking isn’t really needed.) 2

Besides these programs, the state has programs such as PEAK, which pay cash benefits to companies. Also, the city supports applications for state and federal historic preservation tax credits. Receiving tax credits is as good as receiving cash.

Set aside the question of whether these incentive programs are necessary and effective. Then we’re left with a few questions:

Is the mayor not aware that these incentive programs are as valuable to companies as receiving cash payments?

Or does the mayor believe that the methods by which these programs are implemented obscure the economic realities?

Or is there some other reason?

Wichita MSA employment since 2010. Click for larger.
It’s encouraging that the mayor wants to change something. Since the last recession, Wichita is falling further behind the rest of the country in job growth. 8 For the two recessions before that, Wichita was able to catch up to the rest of the country in job growth. But that isn’t happening now.

But if the mayor thinks we’re doing something other than using the equivalent of cash to lure companies to Wichita — or just to retain existing companies — he is wrong.

Trends of business activity in downtown Wichita. Click for larger.
By the way, the Journal article reports this: “Wichita, known as the ‘air capital of the world,’ is working with the industry to train thousands of new workers while sprucing up downtown in an attempt to make it a place where people want to stay — and to dissuade companies from shipping the jobs overseas.”

It’s true that a lot of money, but public and private, has been spent on downtown. The economic results, unfortunately, are not good: Since the time of increased investment, there are fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. 9


Notes

  1. Weeks, Bob. Industrial revenue bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/industrial-revenue-bonds-kansas/.
  2. Ibid.
  3. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.
  4. Weeks, Bob. STAR bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/star-bonds-kansas/.
  5. Weeks, Bob. Community improvement districts in Kansas. Available at https://wichitaliberty.org/kansas-government/community-improvement-districts-kansas/.
  6. Weeks, Bob. More Cargill incentives from Wichita detailed. Available at https://wichitaliberty.org/wichita-government/cargill-incentives-from-wichita-detailed/.
  7. Ibid.
  8. Weeks, Bob. Wichita MSA employment series. Available at https://wichitaliberty.org/economics/wichita-msa-employment-series/.
  9. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.

Wichita employment trends

While the unemployment rate in the Wichita metropolitan area has been declining, the numbers behind the decline are not encouraging.

The unemployment rate, a widely-cited measure of the health of an economy, is not an absolute measure. Instead, it is a ratio, specifically the ratio of the number of unemployed people to the number of people in the labor force. (The labor force, broadly, is the number of persons working plus those actively looking for work. 1)

It is entirely possible that the unemployment rate falls while the number of people employed also falls. This is the general trend in Wichita for the past seven years or so. Here are some figures from Bureau of Labor Statistics, part of the United States Department of Labor: 2

The May 2017 unemployment rate declined to just about half the January 2011 rate. The number of employed persons rose by 1.1 percent. The labor force fell by 3.7 percent.

If we consider only unemployment rate, it looks like the Wichita area is prospering. But the unemployment rate hides bad news: The number of jobs increased only slightly, and the labor force fell. While it’s good that there are more people working, the decline in the labor force is a problem.

In the nearby chart you can see these effects. The unemployment rate has been declining, although it has recently increased slightly. The labor force has been declining. The number of employed persons has increased, although it has recently declined.

To use an interactive visualization of employment data for Wichita, click here.

Example from the visualization. Click for larger.


Notes

  1. The labor force, specifically the civilian labor force, are those people working, plus those people actively searching for work, minus people under 16 years of age, minus people living in institutions (for example, correctional facilities, long-term care hospitals, and nursing homes), minus people on active duty in the Armed Forces.
    BLS defines unemployed people as: “Persons aged 16 years and older who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed.”
    The unemployment rate is “the number unemployed as a percent of the labor force.”
    Bureau of Labor Statistics. Glossary. Available at https://www.bls.gov/bls/glossary.htm.
  2. Bureau of Labor Statistics. Labor Force Statistics from the Current Population Survey. Available at https://www.bls.gov/cps/.

Wichita metro employment and unemployment

An interactive visualization of labor force, employment, and unemployment for the Wichita MSA.

The Bureau of Labor Statistics, part of the United States Department of Labor, makes monthly employment and unemployment statistics available. 1 I’ve gathered them for the Wichita metropolitan area and present them in an interactive visualization.

This data comes from the BLS Local Area Unemployment Statistics (LAUS) program. 2 It is part of the Bureau’s Current Population Survey (CPS), which is a “monthly survey of households conducted by the Bureau of Census for the Bureau of Labor Statistics.” 3

In the visualization you may select tabs to show a table or charts. The moving average tab holds smoothed data, using the average of all values for the previous year. You may also select a range of dates for the charts.

To use the visualization, click here.

Example from the visualization. Click for larger.


Notes

  1. The labor force, specifically the civilian labor force, are those people working, plus those people actively searching for work, minus people under 16 years of age, minus people living in institutions (for example, correctional facilities, long-term care hospitals, and nursing homes), minus people on active duty in the Armed Forces.
    BLS defines unemployed people as: “Persons aged 16 years and older who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed.”
    The unemployment rate is “the number unemployed as a percent of the labor force.”
    Bureau of Labor Statistics. Glossary. Available at https://www.bls.gov/bls/glossary.htm.
  2. Bureau of Labor Statistics. Local Area Unemployment Statistics (LAUS) program. Available at https://www.bls.gov/lau/.
  3. Burea of Labor Statistics. Current Population Survey. Available at https://www.bls.gov/cps/.

A Wichita social media town hall

A City of Wichita town hall meeting ends in less than nine minutes, with a question pending and unanswered.

As part of its engagement with citizens, the City of Wichita holds social media town hall meetings. On June 20, 2107, there was a Facebook town hall on the topic of economic development featuring Assistant City Manager Scot Rigby. His charge is “developing and implementing a coordinated and comprehensive development services program and for developing, implementing and overseeing economic development, redevelopment and real estate programs and projects.” He’s worked for the city for two years. 1

Promoting the town hall. Click for larger.
There is not a customary duration for events like this, although other social media town halls have been promoted by the city as lasting 90 minutes. Surely citizens might expect any meeting like this to last at least 30 minutes, if not 60 or more.

But Wichita Assistant City Manager Scot Rigby’s town hall meeting on June 20 lasted eight minutes and 22 seconds.

(A screen capture of the event is available here, and the entire event as recorded on Facebook is here.)

It wasn’t for lack of questions that the meeting ended so quickly. One question I asked had to do with the city’s reporting on its economic development efforts. The City of Lawrence annually produces a comprehensive report, but Wichita does not. 2 Rigby answered this question online, which is the way these things are supposed to work.

An excerpt from the town hall. Click for larger.
Then I asked this question: “There has been a lot of investment, public and private, in downtown Wichita. What has been the trend in the number of business firms, employees, and payroll during that time?” That was six minutes and 50 seconds after the start of the meeting, according to Facebook. The meeting ended 92 seconds later with no answer to this question.

But I wanted the city to answer my question. After five weeks of multiple requests through both Facebook and email, I received a response from the city:

from: Bob Weeks
to: Scot Rigby

Hi, I’m still wondering why the social media town hall from June 20 was ended after less than nine minutes. There is still a pending question.

For your convenience, here is the link to the Facebook video:
“https://www.facebook.com/cityofwichita/videos/1450322791680383/”

Thank you,
Bob Weeks

Dear Mr. Weeks-

Scot Rigby asked that I follow up with your question since I was involved with coordination of the Social Media Town Hall events.

During the Social Media Town Hall events on June 15 and June 20 we presented content in a variety of formats on Facebook and Twitter. We used the Facebook Live format for one topic, but 30 second videos for 14 other topics (seven on each day). We publicized the Facebook Live topic the day before, and our intent was to respond to questions from that topic as well as during the event. We ended the Facebook Live event after responding to comments and feedback from June 15 and focused efforts on responding to other posts as well as Nextdoor, which we used for the first time during the Social Media Town Hall this year. Because of changes in technology, each year the Social Media Town Hall is a little different.

Sincerely-

Elizabeth

Elizabeth Goltry Wadle
Principal Budget Analyst
City of Wichita

I think I’ll characterize this as nonresponsive.

Besides this answer, the city also responded on Facebook on July 18, nearly a month after I posed the question. That response referred me to the 2016 State of Downtown Report from the Wichita Downtown Development Corporation. That is also (mostly) nonresponsive to my question.

Trends of business activity in downtown Wichita. Click for larger.
In a way, I can sympathize with Rigby not wanting to answer my question. Perhaps he doesn’t know the answer. But he might know — he should know — the answer, which is that since 2007 there are fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. In all cases, the trend is lower. 3

Regarding the 2016 State of Downtown Report from the Wichita Downtown Development Corporation: That document claims there are 26,000 workers in downtown Wichita. That is a large mistake and greatly overstates the number of workers. 4

It’s curious that the city did not refer me to a 2017 edition of the State of Downtown Report. But that document does not exist. It’s common for these reports to be released in May, but this year’s report is not yet available.

The city takes pride in being responsive to citizens. Former Mayor Carl Brewer often spoke in favor of government transparency. For example, in his State of the City address for 2011, he listed as an important goal for the city this: “And we must provide transparency in all that we do.”

When the city received an award for transparency in 2013, a city news release quoted Wichita City Manager Robert Layton:

“The City Council has stressed the importance of transparency for this organization,” City Manager Robert Layton said. “We’re honored to receive a Sunny Award and we will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.”

Shortly after his election, current Mayor Jeff Longwell penned a column in which he said, “First off, we want City Hall to be open and transparent to everyone in the community.”

Is a lack of staff at city hall the reason why I can’t get an answer to a question? I don’t think so. Two years ago the city expanded its staff by hiring a Strategic Communications Director. When the city announced the new position, it said: “The Strategic Communications Director is the City’s top communications position, charged with developing, managing, and evaluating innovative, strategic and proactive public communications plans that support the City’s mission, vision and goals.”

My experience with this social media town hall runs contrary to the city’s proclaimed goals, and this is not the only time I’ve had problems with the city regarding requests for information. 5


Notes

  1. City of Wichita. Assistant City Manager, Development Director Hired. Available at http://www.wichita.gov/News/Pages/2015-07-15a.aspx.
  2. Weeks, Bob. Wichita doesn’t have this. Available at https://wichitaliberty.org/wichita-government/wichita-does-not-have-this/.
  3. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.
  4. Weeks, Bob. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/.
  5. Weeks, Bob. During Sunshine Week, here are a few things Wichita could do. Available at https://wichitaliberty.org/open-records/sunshine-week-wichita/.

Naftzger Park tax increment financing (TIF)

Background on tax increment financing (TIF) as applied to Naftzger Park in downtown Wichita.

The City of Wichita has proposed using tax increment financing (TIF) revenue to redevelop Naftzger Park in downtown Wichita. Various city officials have said something along these lines: There is a pot of money — 1.5 million dollars — available for use on Naftzger Park, and this money can’t be used for any other purpose. Also, it’s implied that if this money is not used on Naftzger Park, this money will not be available for any purpose, almost as though the money will be wasted.

The source of the money is tax increment financing (TIF). This is a method of public finance whereby future property tax revenues are redirected from their normal flow to something else. The amount of taxes that are paid at the time of the formation of the TIF district is called the base, which is a function of the district’s original assessed value. The plan is that as new property is built or existing property renovated in the TIF district, there is more assessed value, and more taxes are levied and collected. The amount of taxes paid each year above the base is called the increment. It is these incremental taxes that are captured and rerouted. Because TIF is usually applied to blighted areas and the property is not highly valued, the base is usually low. In successful TIF projects, the increment can be very large. 1

To where are the incremental taxes redirected? Generally, to the benefit of property owners in the TIF district. 2 While there are restrictions on how TIF dollars may be spent, I don’t think any developers within TIF districts have not been able to take full advantage of the TIF dollars that are available, although Naftgzer Park is a special case (see below).

Advocates of TIF make it sound as though it is free money. They often say that if the proposed project does not receive TIF financing, it can’t be built. This is the “but for” justification: But for the benefit of TIF, nothing will happen. Without TIF there will be no development, and no future incremental taxes will be collected.

There are several issues with this line of thinking. First, the but for rationale is subject to abuse. Developers who want to use TIF have a large monetary incentive to make it appear as though their projects are not financially viable without TIF. That’s the meaning of but for. To make their case for TIF, developers supply financial projections to cities, and the city usually accepts them at face value. These financial projections rely on many assumptions about the future, often 20 or more years in the future. For example, what will be the occupancy rate and average room rate for a proposed hotel in 15 years? Forecasting these values for next year is difficult enough. Yet, it is projections like these that form the basis of the necessity of TIF.

City officials do not have the expertise to evaluate these financial projections. If citizens want to see these projections, the City of Wichita will not supply them, in most cases.

Second: The pleas for TIF made by developers are sometimes plainly false. In Wichita, a developer wanted to build a grocery store using TIF and other incentives. He told the city he has “researched every possible way” to make the project work, and it would not work without TIF. 3 A representative of the developer told the city council, “There will not be a building on that corner if this [TIF] is not passed today. … That new building would not be built. I absolutely can tell you that because we have spent months … trying to figure out a way to finance a project in that area.”

The city’s chief economic development official told the council, “We know, for example, from the developer’s perspective in terms of how much they will make in lease payments from the Save-A-Lot operator, how much that is, and how much debt that will support, and how much funds the developer can raise personally for this project. That has, in fact, left a gap, and these numbers that you’ve seen today reflect what that gap is.” 4

While the city approved TIF, the county did not. So TIF was not available, and the developer abandoned the project. But: A different developer built the same grocery store and additional retail space at the same location without TIF. It is still in operation six years later.

Third: If it is true that we can’t have new development without TIF, there may be obstacles in place that should be removed so that development can take place without TIF.

Not free money

TIF has a cost. A real cost. If we don’t recognize that, then we must reconsider the foundation of local tax policy.

In Wichita, as in most cities, the largest consumers of property tax dollars are the city, county, and school district. All justify their tax collections by citing the services they provide: Law enforcement, fire protection, education, etc. It is for providing these services that we pay local taxes.

Within a TIF district, however, the new property tax dollars — the increment — do not go to the city, county, and school district to pay for services. Instead, these dollars are used in ways that benefit the development: Property acquisition, site preparation, utilities, drainage, street improvements, streetscape amenities, public outdoor spaces, landscaping, and parking facilities, according to the city’s explanation.

Yet, the new development will undoubtedly demand and consume the services local government provides — law enforcement, fire protection, and education. But its incremental property taxes do not pay for these, as they have been diverted elsewhere. (The base property taxes still go to pay for these services, but the base is usually low.) Instead, others must pay the cost of providing services to the TIF development, or accept reduced levels of service as existing service providers are saddled with new demand.

Supporters of TIF argue that developers aren’t getting a free ride. The city isn’t giving them cash, they say. The owners of the TIF development will be paying their full share of higher property taxes in the future. That’s true. But, these new tax dollars are spent for their benefit, not to pay for the cost of government.

We’re left with an uncomfortable situation. City officials tell us that we must pay property taxes so the city can provide services. (In fact, right now the Wichita city manager is recommending increasing property taxes to pay for more police officers.)

At the same time, however, the city creates special classes of people who use services but don’t pay for them.

Yes, the city and developers cite the but for argument, arguing that without the benefit of TIF, there won’t be new development and new demand for services. But we’ve seen that the but for rationale is dubious and subject to abuse.

Of note: At a recent public meeting regarding Naftzger Park, someone asked if some of the $1.5 million could be used for more police officers. The answer from city officials was “no.” That answer is correct. But in the normal case, part of this $1.5 million would be available to pay for more police.

Also: The redevelopment district in which incremental taxes will be redirected to Naftzger Park includes a number of properties that are already developed.

Allowed uses: It’s just infrastructure

In their justification of TIF, proponents may say that TIF dollars are spent only on allowable purposes. Usually a prominent portion of TIF dollars are spent on things that are related to infrastructure, as listed above. This allows TIF proponents to say the money isn’t really being spent for the benefit of a specific project. It’s spent on infrastructure, they say, which they contend is something that benefits everyone, not one project specifically. Therefore, everyone ought to pay.

But this isn’t the case. Often non-TIF developers pay for significant infrastructure at their own expense. An example is the Waterfront development in northeast Wichita. There is a street that winds through the development, Waterfront Parkway. To anyone driving or walking in this area, they would think this is just another city street — although a very nicely designed and landscaped street. But the city did not pay for this street. Private developers paid $1,672,000 for this infrastructure, and then deeded it to the city. The same developers paid for street lights, traffic signals, sewers, water pipes, and turning lanes on major city streets. In order to build the Waterfront development, private developers paid for infrastructure, with a total cost of these projects at one time being $3,334,500. It has likely risen since then. 5

In the case of Naftzger Park, it’s argued that the park benefits everyone. Therefore, it’s akin to infrastructure. In reality, the park is more like the front yard of a proposed hotel and a nearby building, being developed for their owner’s benefit. The developers of these are managing, along with the city, the plans for Naftzger Park. Incredibly, applications to be the park’s architect were sent not to the city, but to the private developers. 6

Further: Park improvements were not an allowed use of TIF funds when the Center City South TIF was formed in 2007. So the city amended the TIF district plan to allow for TIF funds to be used to redevelop Naftzger Park. 7

Redirect your taxes, not mine

The Wichita Downtown Development Corporation (WDDC) is funded, primarily, by property taxes. A district known as the Self-Supported Municipal Improvement District (SSMID) levies a property tax in a district roughly defined as from Kellogg north to Central, and the Arkansas River east to Washington Street. In 2011 the mill levy was 5.950 and raised nearly $600,000 in revenue. 8 For 2016 the mill levy was 7.140. With an assessed value of $92,901,423, the SSMID tax ought to raise about $663,000. 9

All the property tax money raised by the SSMID is used to fund WDDC.

Now, WDDC — one of the leading advocates for the use of TIF in downtown Wichita — is quite happy to see incremental tax dollars redirected away from the city, county, and school district to benefit TIF developers. You might think that WDDC would also participate in this — purportedly — beneficial arrangement, consenting for its share of property tax to also be redirected for the benefit of developers.

Guess again. The SSMID — nearly the only source of funding for WDDC — is exempted from having its tax revenue capture by TIF and redirected to another purpose.


Notes

  1. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.
  2. The Center City South TIF district is an unusual case in that only 70 percent of the incremental taxes are redirected.
  3. Weeks, Bob. In Wichita Planeview neighborhood: Yes, we have! Available at https://wichitaliberty.org/wichita-government/in-wichita-planeview-neighborhood-yes-we-have/.
  4. Weeks, Bob. For Wichita, Save-A-Lot teaches a lesson. Available at https://wichitaliberty.org/wichita-government/for-wichita-save-a-lot-teaches-a-lesson/.
  5. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.
  6. City of Wichita. Request for Qualification No. – FP740043. Available at https://drive.google.com/file/d/0B97azj3TSm9MQ1ZVcXVsNVQ2dkE/view?usp=sharing.
  7. Wichita city council agenda packet for May 16, 2016, agenda item IV-1.
  8. Wichita city ordinance 48-786. Available at http://wichitaks.granicus.com/MetaViewer.php?view_id=2&clip_id=820&meta_id=65004.
  9. Sedgwick County Clerk’s Office and author’s calculations.

Upcoming Naftzger Park legislative action

The redesign of Naftzger Park in downtown Wichita is not a done deal, at least not legally.

While the City of Wichita is engaging citizens and planning for the future of Naftzger Park, there is still another legislative step the city must take in order to fully proceed. In Kansas, use of tax increment financing requires at least two steps. The first step is that cities or counties establish the boundaries of the TIF district. After the TIF district is defined, cities then must approve one or more project plans that authorize the spending of TIF funds in specific ways. (The project plan is also called a redevelopment plan.) In Kansas, overlapping counties and school districts have an opportunity to veto the formation of the TIF district, but this rarely happens. Once the district is formed, cities and counties have no ability to object to TIF project plans. 1

Center City South Redevelopment TIF District, July 2017. Click for larger.
In the case of Naftzger Park, the TIF district (named Center City South) was formed some years ago, and there have been redevelopment plans adopted that cover portions of this rather large TIF district. Now a new redevelopment project area is proposed that includes Naftzger Park and some surrounding property. In the nearby map from the city, the Center City South TIF district is shown. The redevelopment project area under consideration is labeled “11.”

In order to pass a redevelopment plan into statute, Kansas law requires a public hearing and passage of the redevelopment plan by a two-thirds majority of the governing body. For the Wichita city council, that means five votes are needed to adopt the project plan and start spending money. 2

Documents from the city explain: “The next step in establishing the legal authority to use TIF is the adoption by the City Council of a redevelopment project plan, within the district, which provides more detailed information on the proposed project and how TIF would be used, and demonstrates how the projected increase in property tax revenue will amortize the costs financed with TIF.” 3

Just for emphasis, from the same document: “Once adopted, the City will be authorized to use TIF to finance eligible project costs.”

(The terminology may be confusing. Some documents use the term “project plan” and sometimes “redevelopment plan.” TIF districts are also sometimes referred to as “redevelopment districts.”)

On July 11, 2017 the Wichita city council set August 15 as the date for the public hearing. Presumably a vote on adoption of the redevelopment plan will be at the same meeting, although votes like this have been delayed. And, there’s no guarantee there will be five votes in favor of adopting the plan.

Since the redevelopment plan has not been adopted, you may be wondering how the city is going to use TIF funds to pay the architects. That’s a good question. It is the city’s declared intent to use TIF funding for work that is currently being done: “The park design is anticipated to be provided by Tax Increment Financing and is identified in the proposed 2018 CIP.” 4

Another consideration: The city is proceeding at full speed — “an aggressive timetable” is the quote from the city manager — on the plan to redevelop Naftzger Park. 5 Public sentiment seems to be that it is a “done deal.” It’s going to happen, people are resigned to say.

To his credit, the city manager is also quoted in the same Eagle article showing his understanding that the process is not complete: “If the process doesn’t allow us to do it, it doesn’t allow us to do it,”

But other city officials act as though the design of Naftzger Park is inevitable, that the TIF money is there waiting to be spent, and those funds will be lost if not spent on the park.

With attitudes like this, I wonder why we should bother holding a public hearing.

Following is an excerpt from the July 11, 2017 city council agenda packet:

The next step in establishing the legal authority to use TIF is the adoption by the City Council of a redevelopment project plan, within the district, which provides more detailed information on the proposed project and how TIF would be used, and demonstrates how the projected increase in property tax revenue will amortize the costs financed with TIF. …

In accordance with state law, a TIF Project Plan has been prepared in consultation with the Wichita-Sedgwick County Metropolitan Area Planning Commission, which has made a finding that the project is consistent with the Comprehensive Plan for development of the area. In order to adopt a TIF Project Plan, the City Council must first set a public hearing no less than 30 and no more than 70 days from adoption of the resolution setting the hearing. The date of August 15, 2017, at the regular City Council meeting is proposed for the public hearing on the Naftzger Park Project Plan.

If adopted by the City Council, the attached resolution setting the August 15, 2017 public hearing will be sent to the owners and occupants of all property located within the proposed Naftzger Park Project Area, by certified mail. The resolution will also be published in the Wichita Eagle and copies will be provided to the Board of County Commissioners and Board of Education and their appropriate staff.

After closing the public hearing on August 15, 2017, the City Council may adopt the TIF Project Plan by ordinance, by two-thirds majority vote. Once adopted, the City will be authorized to use TIF to finance eligible project costs.


Notes

  1. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.
  2. 7 city council members times 2 divided by 3 equals 4.67, which must be rounded up to 5.
  3. Wichita city council agenda packet for July 11, 2017, item IV-1.
  4. Wichita city council agenda packet for July 18, 2017, item IV-3.
  5. Finger, Stan. Contentious crowd gathers to discuss Naftzger Park’s future, redesign. Wichita Eagle, July 27, 2017. Available here: http://www.kansas.com/news/politics-government/article164112397.html.

Wichita WaterWalk contract not followed, again

Wichita city hall failed to uphold the terms of a development agreement from five years ago, not monitoring contracts that protect the public interest.

Two weeks ago a Wichita Eagle article reported on a 2002 public-private partnership that called for the private-sector company to submit an annual report to the city. But the company did not submit the reports, and the city didn’t ask for them. The city did after the Eagle inquired. 1

Much of the Eagle article described why current city officials were not aware of the 2002 agreement: “Due largely to turnover on the city staff and term limits on the City Council, top officials at City Hall were unaware of the contract provisions until The Eagle inquired about them. … No city official who played a major role in the 2002 contract is still actively involved in government.”

The article quoted Mayor Jeff Longwell as “interested in WaterWalk fulfilling any contractual agreement they have in place (with the city), even if that contract was made 20 years prior to my time.”

Now we know that the city did not enforce a similar agreement with the same WaterWalk developer made while Longwell was a council member. The city manager who oversaw the agreement is still manager.

WaterWalk additional rent calculation, excerpt. Click for larger.
We don’t have to look as far back in history as 2002 to find an agreement the city did not enforce, one where the city was not protecting the interest of taxpayers. In 2012 the city entered into a same or similar agreement in the same WaterWalk development with the same developer, Jack P. Deboer. It also called for the city to potentially earn payments, called “additional annual rent.” It also called for reports to be made, although the exact language used is “provide that calculation.” 2

I asked for the annual reports on July 10. Three days later I received a message indicating the documents would be ready on July 19. On that day they arrived. Like those provided to the Eagle, they were heavily redacted and showed that no additional rent was due the city.

Upon further inquiry, it is clear that these reports were not filed with the city on an annual basis, but were created only after I asked for them. 3

Calculations use incorrect formula

The 2012 agreement specified that the WaterWalk developer would be able to annually deduct 20 percent of the construction costs as “development cost return.” But, in the calculations provided to me by the city, 17 percent is used instead. 4

WaterWalk additional rent calculation, excerpt. Click for larger.

The city excused this error as being in favor of the city, and no additional rent was due in any case.

Redacted, not really

As shown in the examples above, the documents provided to me were heavily redacted, with nearly all numbers obscured. The illustrations show the appearance of the pdf document when opened in Acrobat reader or another pdf reader.

But a simple copy and paste into another application like Microsoft Word revealed the blacked-out numbers. The procedure used by the city didn’t really redact the numbers. It appears that someone used the Acrobat drawing tools to draw thick black lines over the numbers, which isn’t effective. Acrobat offers a set of redaction tools specifically designed for removing sensitive content from pdfs, and the city should have used this method. 5

When I reported this finding to the city, Elder replied: “We would ask that you respect the privacy of this information as well as the City’s obligations under the Kansas Open Records Act at K.S.A. 45-221(b), included below, which strictly prohibits the release of the financial information of a taxpayer, and not disclose the financial information.” 6

I don’t believe that the Kansas Open Records Act prohibits the disclosure of this information, and it is in the public interest that these numbers are available. At the moment, I am inclined to respect the city’s request.

Again

Here is another example of the city and its private-sector partners failing to observe a contract. The city did not monitor its agreements to protect the public interest, and this agreement is recent enough that remoteness in time is not an excuse.

Were the 2002 and 2012 development agreements wise for the city? At the time of the 2012 deal, I wrote this: 7

[There] is a provision that requires the apartment developer to pay “Additional Annual Rent.” Under this concept, each year the apartment developer will calculate “Adjusted Net Cash Flow” and remit 25 percent of that to the city.

To the casual observer, this seems like a magnanimous gesture by the apartment developer. It makes it look like the city has been a tough negotiator, hammering out a good deal for the city, letting citizens profit along with the apartment developer.

But the definition of cash flow includes a comprehensive list of expenses the may be deducted, including the cost of repaying any loans. There’s also an allowable expense called “Tenant Development Cost Return,” which is the apartment developer’s profit. The agreement defines this profit as 20 percent, and it’s deducted as part of the computation of “Adjusted Net Cash Flow.”

If there is ever any money left over after the dedication of all these expenses and profit margin, I will be surprised. Shocked, even. Here’s one reason why. One of the allowable deductions that goes into the computation of “Adjusted Net Cash Flow” is, according to city documents: “Amounts paid into any capital, furniture, fixture, equipment or other reserve.” There’s no restriction as to how much can be funneled into these reserve accounts. We can be sure that if this project was ever in the position where it looked like it might have to remit “Additional Annual Rent” to the city, contributions to these reserve funds would rise. Then, no funds paid to the city.

This is an example of the city appearing to be concerned for the welfare of taxpayers. In reality, this concept of “Additional Annual Rent” is worse than meaningless. It borders on deception.

Beyond this, we now know that neither the city nor the WaterWalk developer followed the terms of the deal. The annual reports were not supplied by the company, and they were not requested by the city. As it turns out the annual reports purport to show that the city was owed no money under the profit sharing agreement.

But that’s not the point. The issue is that the city did not enforce a simple aspect of the agreement, and the private-sector company felt it did not need to comply. Taxpayers were not protected, and we’re left wondering whether these agreements were really meant to be followed.


Notes

  1. Lefler, Dion. WaterWalk profit-sharing: 15 years, zero dollars for Wichita. Wichita Eagle, July 8, 2017. Available at http://www.kansas.com/news/politics-government/article160147944.html.
  2. “As Additional Annual Rent Tenant shall pay a sum equal to twenty-five percent (25%) of the Adjusted Net Cash Flow commencing with the first day the Tenant Improvements open for business. The Tenant shall calculate Adjusted Net Cash Flow for each Current Year within forty-five (45) days after the end of the Current Year (or portion thereof) and provide that calculation, and pay to the Landlord the Additional Annual Rent, within sixty (60) days after the end of the Current Year. Additional Annual Rent shall continue until this Lease expires. Adjusted Net Cash Flow is Gross Revenues less Total Expenses, less the total amount of capital expenses for furniture, fixtures, and equipment for the Tenant Improvements in excess of the aggregate amount expended from any reserve during such year.” Amendments to WaterWalk Developer Agreements. August 21, 2012. Available at https://drive.google.com/file/d/0B97azj3TSm9Mdm1tWjlQbVAzemM/view?usp=sharing.
  3. Email from city development analyst Mark Elder, July 21, 2017. “The annual report for this project was requested in the same time frame as the reports provided for Gander Mountain however, the documents were provided to the City within the last week.”
  4. Wichita City Council agenda packet for August 21, 2012. Waterwalk Ground Lease, Section 16.08. “Tenant Development Cost Return, defined as, on an annual basis, twenty percent (20%) of the total Construction Costs for all Tenant Improvements paid by Tenant, Developer, or permitted assignees and sublessees. As further clarification, the amount determined to be twenty percent (20%) of the total Construction Costs for all Tenant Improvements may be included in the calculation of the Total Expenses each year during the Term of this Lease.”
  5. Adobe.com. Removing sensitive content from PDFs. Available at https://helpx.adobe.com/acrobat/using/removing-sensitive-content-pdfs.html.
  6. “Except to the extent disclosure is otherwise required by law or as appropriate during the course of an administrative proceeding or on appeal from agency action, a public agency or officer shall not disclose financial information of a taxpayer which may be required or requested by a county appraiser or the director of property valuation to assist in the determination of the value of the taxpayer’s property for ad valorem taxation purposes; or any financial information of a personal nature required or requested by a public agency or officer, including a name, job description or title revealing the salary or other compensation of officers, employees or applicants for employment with a firm, corporation or agency, except a public agency. Nothing contained herein shall be construed to prohibit the publication of statistics, so classified as to prevent identification of particular reports or returns and the items thereof.”
  7. Weeks, Bob. Wichita WaterWalk apartment deal not good for citizens. https://wichitaliberty.org/wichita-government/wichita-waterwalk-apartment-deal-not-good-for-citizens/.

In Wichita, new stadium to be considered

The City of Wichita plans subsidized development of a sports facility as an economic driver.

West Bank Redevelopment District. Click for larger.
This week the Wichita City Council will consider a project plan for a redevelopment district near Downtown Wichita. It is largely financed by Tax Increment Financing and STAR bonds. Both divert future incremental tax revenue to pay for various things within the district.1 2

City documents promise this: “The City plans to substantially rehabilitate or replace Lawrence-Dumont Stadium into a multi-sport athletic complex. The TIF project would allow the City to make investments in Lawrence-Dumont Stadium, construct additional parking in the redevelopment district, initiate improvements to the Delano multi-use path and make additional transportation improvements related to the stadium project area. In addition to the stadium work, the City plans to construct, utilizing STAR bond funds, a sports museum, improvements to the west bank of the Arkansas River and construct a pedestrian bridge connecting the stadium area with the Century II block. The TIF project is part of the overall plan to revitalize the stadium area and Delano Neighborhood within the district.”3

We’ve heard things like this before. Each “opportunity” for the public to invest in downtown Wichita is accompanied by grand promises. But actual progress is difficult to achieve, as evidenced by the example of Block One.4

Trends of business activity in downtown Wichita. Click for larger.
In fact, change in Downtown Wichita — if we’re measuring the count of business firms, jobs, and payroll — is in the wrong direction, despite large public and private investment. 5

Perhaps more pertinent to a sports facility as an economic growth driver is the Intrust Bank Arena. Five years ago the Wichita Eagle noted the lack of growth in the area. 6 Since then, not much has changed. The area surrounding the arena is largely vacant. Except for Commerce Street, that is, and the businesses located there don’t want to pay their share of property taxes. 7

I’m sure the city will remind us that the arena was a Sedgwick County project, not a City of Wichita project, as if that makes a difference. Also, the poor economic performance cited above is for Downtown Wichita as delineated by zip code 67202, while the proposed stadium project lies just outside that area, as if that makes a difference.

By the way, this STAR bonds district is an expansion of an existing district which contains the WaterWalk development. That development has languished, with acres of land having been available for development for many years. We’ve also found that the city was not holding the WaterWalk developer accountable to the terms of the deal that was agreed upon, to the detriment of Wichita taxpayers. 8

Following, selected articles on the economics of public financing of sports stadiums.

The Economics of Subsidizing Sports Stadiums

Scott A. Wolla, “The Economics of Subsidizing Sports Stadiums,” Page One Economics, May 2017. This is a project of the Federal Reserve Bank of St. Louis. Link.
“Building sports stadiums has an impact on local economies. For that reason, many people support the use of government subsidies to help pay for stadiums. However, economists generally oppose such subsidies. They often stress that estimations of the economic impact of sports stadiums are exaggerated because they fail to recognize opportunity costs. Consumers who spend money on sporting events would likely spend the money on other forms of entertainment, which has a similar economic impact. Rather than subsidizing sports stadiums, governments could finance other projects such as infrastructure or education that have the potential to increase productivity and promote economic growth.”

What economists think about public financing for sports stadiums

Jeff Cockrell, Chicago Booth Review, February 01, 2017. Link.
“But do the economic benefits generated by these facilities — via increased tourism, for example — justify the costs to the public? Chicago Booth’s Initiative on Global Markets put that question to its US Economic Experts Panel. Fifty-seven percent of the panel agreed that the costs to taxpayers are likely to outweigh benefits, while only 2 percent disagreed — though several panelists noted that some contributions of local sports teams are difficult to quantify.”

Publicly Financed Sports Stadiums Are a Game That Taxpayers Lose

Jeffrey Dorfman. Forbes, January 31, 2015. Link.
“Once you look at things this way, you see that stadiums can only justify public financing if they will draw most attendees from a long distance on a regular basis. The Super Bowl does that, but the average city’s football, baseball, hockey, or basketball team does not. Since most events held at a stadium will rely heavily on the local fan base, they will never generate enough tax revenue to pay back taxpayers for the cost of the stadium.”

Sports Facilities and Economic Development

Andrew Zimbalist, Government Finance Review, August 2013. Link.
“This article is meant to emphasize the complexity of the factors that must be evaluated in assessing the economic impact of sports facility construction. While prudent planning and negotiating can improve the chances of minimizing any negative impacts or even of promoting a modest positive impact, the basic experience suggests that a city should not expect that a new arena or stadium by itself will provide a boost to the local economy.

Instead, the city should think of the non-pecuniary benefits involved with a new facility, whether they entail bringing a professional team to town, keeping one from leaving, improving the conveniences and amenities at the facility, or providing an existing team with greater resources for competition. Sports are central to cultural life in the United States (and in much of the world). They represent one of the most cogent ways for residents to feel part of and enjoy belonging to a community. The rest of our lives are increasingly isolated by modern technological gadgetry. Sport teams help provide identity to a community, and it is this psychosocial benefit that should be weighed against the sizeable public investments that sports team owners demand.”


Notes

  1. Weeks, Bob. STAR bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/star-bonds-kansas/.
  2. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.
  3. Wichita City Council, agenda packet for July 18, 2017.
  4. Weeks, Bob. Downtown Wichita’s Block One, a beneficiary of tax increment financing. Before forming new tax increment financing districts, Wichita taxpayers ought to ask for progress on current districts. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-block-one-beneficiary-tax-increment-financing/.
  5. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.
  6. “Ten years ago, Elizabeth Stevenson looked out at the neighborhood where a downtown arena would soon be built and told an Eagle reporter that one day it could be the ‘Paris of the Midwest.’ What she and many others envisioned was a pedestrian and bike-friendly neighborhood of quaint shops, chic eateries and an active arts district, supported by tens of thousands of visitors who would be coming downtown for sporting events and concerts. It hasn’t exactly turned out that way. Today, five years after the opening of the Intrust Bank Arena, most of the immediate neighborhood looks much like it did in 2004 when Stevenson was interviewed in The Eagle. With the exception of a small artists’ colony along Commerce Street, it’s still the same mix of light industrial businesses interspersed with numerous boarded-up buildings and vacant lots, dotted with ‘for sale’ and ‘for lease’ signs.” Lefler, Dion. 5 years after Intrust Bank Arena opens, little surrounding development has followed. Wichita Eagle. December 20, 2014. Available at http://www.kansas.com/news/local/article4743402.html.
  7. Riedl, Matt. Has Commerce Street become too cool for its own good? Wichita Eagle. April 8, 2017. http://www.kansas.com/entertainment/ent-columns-blogs/keeper-of-the-plans/article143529404.html.
  8. Weeks, Bob. Wichita WaterWalk agreement not followed. Available at https://wichitaliberty.org/wichita-government/wichita-waterwalk-agreement-not-followed/.

Naftzger Park public hearing to be considered

The Wichita City Council may set August 15, 2017 as the date for a public hearing on the future of Naftzger Park in downtown Wichita.

On Tuesday July 11, 2017, the Wichita City Council will consider setting August 15, 2017 as the date for the public hearing for consideration of the plan for the future of Naftzger Park. The relevant pages of the council agenda may be read here.

Much of the document is boilerplate material regarding tax increment financing districts. But there is some additional information.

First, the project is expected to cost $3,000,000: “Park improvements are projected to costs approximately $3,000,000, with $1,500,000 of such costs to be financed from proceeds of the City’s full faith and credit tax increment bonds.”

Second, we see some evidence of the care — or lack of — that the city puts into preparing these documents. The document contains a table called the “Projected Tax Increment Report.” It shows, year by year, the financial projections for the TIF district. Except: The table is subtitled “West Bank Redevelopment District / Delano and Stadium Project.” I think it’s safe to say that is a mistake. A second table titled “Projected Bond Cash Flow Report” has the same mistaken subtitle.

Here we see one of the real reasons for developing Naftzger Park:

“Seneca Property, LLC and Sunflower Wichita, LLC intend to develop the property immediately adjacent to Naftzger Park . The development of the area will consist of renovation the Spaghetti Works building into 41 apartments and the construction of approximately 62,000 square feet of Class A office and retail space. The development is planned to be designed to complement the Naftzger Park redevelopment design and is anticipated to generate a significant portion of the revenue necessary to support the Project.”

A company is developing property adjacent to Naftzger Park, and the company would like to see the park renovated to its liking. It is proposed that the new property taxes the company will pay be used to pay for the renovation.

Normally increased property taxes are used to pay for things like police and fire protection, city council salaries, and schools. But through tax increment financing (TIF), these increased property taxes will be rerouted for the benefit of the private property owner. In the process, a beautiful park will be replaced with an astroturf-covered plain.

For more information on Naftzger Park, including photographs, see Naftzger Park in Downtown Wichita.

A possible plan for Naftzger Park from the City of Wichita